According to Reuters, Perplexity AI, the U.S. search engine startup reportedly has revised the merger proposal it had submitted to TikTok’s parent company ByteDance to create a new entity combining Perplexity and TikTok U.S.
A key provision in the revised proposal includes the potential for the US government to own up to 50 percent of the new company following an initial public offering. This restructuring aims to address regulatory concerns and pave the way for a valuation of at least $300 billion during the IPO.
According to documents shared with ByteDance and political investors, Perplexity AI plans to create a US-based holding company named “NewCo.” ByteDance would eventually divest TikTok US to NewCo’s investors and they will also ensure that TikTok’s current stakeholders retain equity in the newly formed company. The proposal also excludes TikTok’s core recommendation algorithm, which ByteDance will keep. On the other hand, Perplexity has also offered to integrate itself into NewCo, if its investors get shares in the newly formed entity.
This merger proposal comes shortly after TikTok’s recent restoration of services in the United States. Previously, the app had to suspend its operations in the US due to national security-related regulations. Upon his return to power, President Trump announced his intention to restore the app’s accessibility in the U.S. He revealed that he is in negotiations with several parties interested in acquiring the app, and a decision is expected within the next 30 days.
